Sides sparring over debts and claims on Quay site

A former owner of the Sarasota Quay testified in court Tuesday that an Irish bank wanted to squeeze him out of the $1 billion development planned for the 15-acre waterfront tract.

Sheldon Fenton, who was part of a group that sold the Quay property in late 2003 for roughly $60 million, said Anglo-Irish Bank wanted to work exclusively with Dublin developer Patrick Kelly and partners on the proposed Sarasota Bayside project.

But Bayside faltered and became a casualty of the Great Recession's real estate collapse. And Kelly's Irish American Management Services Ltd. defaulted on roughly $100 million in bank loans in 2009.

The bank filed to foreclose and seize the tract from Irish American two years ago. But Fenton and longtime business associate Rene Gareau blocked that plan, claiming they have unrecorded mortgages and liens on the property worth nearly $10 million.

Gareau's Bussoleno Ltd., a British Virgin Islands company, has $5.7 million in claims on the site.

Now, the two sides are facing off in a Sarasota Circuit Court trial that could decide the fate of one of the most valuable urban properties in Florida.

During the second day of the trial Tuesday, Fenton said the bank told Kelly it wanted him and Gareau out.

"The bank didn't want us to be involved," said Fenton, a Toronto, Canada, resident whose Quay project irked city police and residents because of raucousness in the In Extremis nightclub, a Quay tenant.

Instead, the bank preferred the "close-knit group of Irish guys," Fenton said.

Fenton also said he was "strong-armed" into selling his Quay interests to Kelly's group for less profit so Kelly could get funding for his project. But Fenton said he was ultimately satisfied with the deal, since his loans were paid off and he retained a $4.1 million note that would be paid by Kelly's group over time.

On the witness stand, Fenton sparred in testy exchanges with bank attorney David Boyette, who argued that the bank's debt is superior to the Canadians'.

Anglo-Irish Bank, which was taken over by the Irish government in 2009 amid a series of soured real estate loans, wants clear title to the former Quay site so it can sell it. Analysts say it may be worth about $20 million, or a fifth of its pre-recession value.

Also Tuesday, David Kelly, a financial executive working for Irish American and for Patrick Kelly's Redquartz Ltd. firm but not related to him, said in a deposition read in court that Gareau received more than $5 million from Kelly for living expenses over the years.

"They had been funding his lifestyle," David Kelly said in his deposition.

David Kelly also said Patrick Kelly "felt extremely let down" by Gareau's actions.